If the federal government opens up now restricted areas to drilling and offers incentives to drill more difficult plays, there are still prospects in the United States on and offshore for substantial natural gas exploration and production, according to several oil and gas executives, who spoke Monday at the Ziff Energy Conference in Houston.

Support from federal authorities would grease the wheels to help producers ramp up in restricted areas such as the Rocky Mountains, said Lance Van Anglen, who manages Unocal’s strategy and competitive intelligence. Over the next 25 years, the Rockies could produce up to 7.4 Bcf/d, he said. Meanwhile, the Gulf of Mexico’s shallow and deepwater is projected to just hit about 2 Bcf/d over the same period.

No matter what’s ahead, though, Van Anglen said that “supply projections for the United States weigh heavily on the performance from the West and on imports of liquefied natural gas (LNG).” Because more than half of the Lower 48’s gas production now comes from the Gulf of Mexico region, he stressed the importance of “maintaining the current production base on which to build new supply sources,” which he said, “can’t be overstated.”

Because deepwater and shelf production in the Gulf is averaging about 14 Bcf/d, which it’s maintained since 2001, “so far, so good.” Still, he reminded attendees that the Gulf’s overall production has been on the decline since 1996. What’s needed is to drill deeper and in deeper water.

In Gulf shelf formations less than 5,000 feet deep the gas find potential is about 72 Tcf and the potential for crude is about 17 billion bbl, said Van Anglen. In ultra-deep water formations in the Gulf, the potential could be 60 Tcf and 15 billion bbl. Still, he reminded analysts and producers that nearly 50,000 wells already haven been drilled in the conventional Gulf basin, with only 6%, or 3,100, below 15,000 feet.

Unocal COO Timothy H. Ling said that the company’s Harvest deep shelf exploration well offshore on West Cameron block 44 in the Gulf of Mexico discovered natural gas that could be developed into commercial production. Ling said the well was being sidetracked to determine the extent of the reservoir and ultimate recoverable natural gas volumes.

“We plan to develop the well with a mobile offshore production unit, so we have the opportunity to bring production on line quickly at lower cost,” Ling said. “The possible development timetable and expected production level will be determined after we have completed the sidetrack.”

Later this year, Unocal expects to drill a delineation well to the northeast of the discovery well location. Additional appraisal wells may be drilled. Unocal is operator of West Cameron block 44 and holds a 41% working interest. Co-venturers are Duke Energy Hydrocarbons, a subsidiary of Duke Energy, which has a 37% working interest; The William G. Helis Co. LLC, with a 20% interest; and Houston Energy LP, which holds the remaining 2%.

Ling also said that the Deer Island exploration well onshore in Terrebonne Parish, LA had encountered potentially commercial natural gas resources in the shallow zones, but the deeper objective was not productive. Unocal is operator of the well and holds a 50% working interest. Forest Oil Corp. holds the remaining interest. The companies are evaluating options to commercialize the shallow zone resource.

Unocal is currently producing more than 40 MMcf/d from its two late-2002 deep shelf discoveries, Jalapeno and Rio Grande. The addition of Harvest production would put the company well on its way to meeting or exceeding projections for production from the deep shelf program for the year, with most of the scheduled 2003 prospects yet to be drilled.

ConocoPhillips executive Ryan Lance told the audience that gas well production rates continue to steadily fall, and with the rapid decline in the mature basins, it will require more domestic drilling just to maintain a “given level of gas production.” Lance said that in the early 1990s, it took about 45 months for a well to decline to half its initial production rate. By 1999, it took less than 25 months for the same type of well to decline by half.

The solution will be difficult, said Lance, because increased gas imports from Canada, Mexico and Alaska offer no quick fix, while LNG is expected to provide about 5 Tcf a year of global demand, and the United States will be competing with other countries for supplies.

Existing domestic production will feed U.S. demand for about 20 Tcf a year through 2005, he said, but demand requires new supplies after that period. He said ConocoPhillips is lobbying for new requirements in production efficiency, improved access in the San Juan basin and expansion of the western transportation system.

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